Monday, August 16, 2010

Housing update -- Some good news. Some bad news.

The good news is it appears the number of people with late home loans may have peaked.  From the data released by Fannie Mae and presented at blog Paper Money it looks like the percentage of seriously delinquent home loans may have peaked and is on the way back down.

Unfortunately one reason the late pay rate is falling is Fannie Mae foreclosing on homes. From Calculatedrisk one can see the total real estate owned (REO) by the big 3 goverment agencies continues to rise.   These homes owned will need to be eventually sold by the Gov't agencies and until both the late pay rate and excess inventory is worked off home prices will remain sluggish at best.

Another wrinkle is the late pay rate may be declining if Fannie Mae is increasing their foreclosure rate and 'clearing out' some of the late payers by taking their homes.  Only when both the late payer rate and REO's in inventory are on the decline can we start considering the worst of the storm as having passed.

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